Report highlights large increase in Richmond legal expenses since 2020

Report highlights large increase in Richmond legal expenses since 2020

Since 2020, Richmond’s budget for the city attorney’s office has grown by more than 140 percent, according to a workforce analysis by government management consultant Raftelis.

According to the city’s figures, Richmond spent $1,610,307 on the city attorney’s office in 2020. For this year, the council has a revised budget of $3,944,864, a nearly 145 percent increase over four years ago.

As of July 4, 2024, the city attorney’s office has spent $2,531,291 of the original  $3,923,307 budgeted for 2024, or 65 percent.

Just as news of a settlement in the Measure U car dealership lawsuit surfaced, Richmond residents learned of another lawsuit against the city. 

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A settlement has been reached between the City of Richmond and Hilltop Auto Mall dealerships in a dispute over business taxes. It is set for approval at the July 2 city council meeting. Six Hilltop Auto Mall dealerships filed suit in 2022, claiming the rate structure under Measure U Gross Receipts Business Tax approved by voters in 2020 led to an unconstitutional 8,000 percent increase in taxes.

Last week, Chevron announced a lawsuit challenging an oil refining ballot measure set to go before voters in November.

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The city contracted with Raftelis for an analysis conducted as part of the State Auditor’s high-risk local government audit program that has raised concerns about Richmond’s staffing levels and budget management. 

City attorney expenditures 2020 – 2024 

Courtesy of Raftelis

Rebekka Hosken, senior manager for Raftelis, told the council last month that the staffing analysis was based on a thorough review of every city department over the past few years.

“This was generated from a review by the State Auditor and in response to their question, does the city need to continue to have the vacancies that it had on its books,” Hosken said.

The project’s scope was to reassess the size of city staff and determine whether vacant positions are needed.

“The analysis was a high-level citywide review, not a deep dive into each specific city department,” Hosken said.

Raftelis recommended reducing reliance on outside legal contracts and increasing in-house legal staff. Richmond contracts with Aleshire & Wynder for its city attorney position, incurring approximately $1.6 million in costs annually. 

Raftelis said that this model, adopted in 2022, has significantly inflated professional and administrative expenses and might not be a suitable long-term model for the office.

According to the report, the city relies on outside counsel for affordable housing issues, employee relations matters, and personnel matters.

Raftelis cautioned that patterns and trends in employee and labor relations might be overlooked or not incorporated into risk management strategy due to reliance on external counsel and limited human resources capacity.

“When an outside firm and lawyer was appointed as city attorney in 2022, professional and administrative costs increased by nearly $1 million, from less than $70,000 or five percent of total costs in 2020 to over $1 million or 52 percent of total costs in 2022,” the report stated. “The city has relied on outsourced professional services for their appointed attorney position and presumably other positions they have struggled to fill.”

The audit identified significant vacancies within the attorney’s office, averaging over 27 percent in the past two years. 

August 2023 vacant positions

Courtesy of Raftelis

The city budgeted $4,138,833 for the city attorney’s office in 2023, with $2,138,823 for professional services and the remainder covering salaries, benefits, cost pool allocations, and other operating expenses.

Raftelis said this understaffing and significant workload, tied to council actions and meetings three times per month, has led to delays in contract reviews and legal counsel for various city departments.

Raftelis suggested Richmond may realize more significant cost savings and improved policies and procedures by transitioning to more in-house attorneys and reducing their outside legal contracts. However, the report warned that this may require compensation-related adjustments to improve market competitiveness for hiring new attorneys. 

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